Andrew Holmes 2-5-7 Formula

[Corey Robinson]

Hi Guys!

I was listening to "The Rental Income Podcast" with Dan Lane and one of his guests Andrew Holmes spoke on a way to build a great foundation for your portfolio when you're starting out and how to pay it down in 7 years.  Here's the formula:

Andrew’s investment strategy adheres to what he calls the “2-5-7” formula. In 2 years, the goal is to accumulate a minimum of 5 properties and pay them off in 7 years. Andrew said, “The formula doesn’t change, it’s just the number of properties, how much cash flow you want to create, and you scale based on that.”

http://rentalincomepodcast.com/his-simple-formula-...

So my first question is has anyone heard of this method and implemented it? 

My second question is can this work with Turnkey properties?

Thank you in advanced!

[Andrew Holmes]

@Account Closed

In response to your post. 

1. If you are buying a property for $ 50 K and fixing for $ 20K never a good idea to refi more than you have in the property. I have never ever refied more than what we have spend. Refinancing more and keep refinancing equity out is what get you in trouble. 

2. You PITI including management cannot be more than 75% of all debt collected. Or ideally even better a debt coverage ratio of 1.5 or more.

3. Any property you buy should be bought with equity. I have always been 100% against ever considering high appraisals. 

Everything I have ever said has been be as humanly conservative as possible and pay off debt on your properties. Where you have come to the conclusion that I have ever promoted risk I am totally confused. 

My point has always been if you need $ 5000 to live on if each rental property makes let's say $900 per month if it is paid off then you buy 7 or 8. 

Each property must have 25% equity

Must have min or $ 350 to $ 400 in net cash flow after expenses with a loan

Use the entire cash flow from all to pay off property 1 and then attack #2 so forth. 

The money you need to live on should never be played with. 

Once you reach that you can be as aggressive as possible. 

Over the past 5 years radio and every meeting I have been conservative and believe you should be debt free. 

I don't just talk about it. I have the record to prove it 165 rental here in chicago all in good areas and all with equity. 

Please if you quote me all i ask it listen to the entire thing understand where I am coming from and put constructive criticism. I am sure there are way of improving what we do. But please don't say I have said thing that are financially risky.